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ES GROUP (HOLDINGS) LIMITED

SUSTAINABILITY REPORT 2020

VOYAGING INTO SUSTAINABILITY

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Company Registration No.: 200410497Z 8 Ubi Road 2 #06-26 Zervex Singapore 408538

Tel: +65 6748 9111 Fax: +65 6284 3005 www.esgroup.com.sg

Copyright 2018, ES Group (Holdings) Limited. All rights reserved. ES Group (Holdings) Limited and its logo are registered trademark.

Feel free to reach out to us on any feedback on this Sustainability Report at [email protected]. A copy of this report can be found at our corporate website or the SGXNet at https://www.sgx.com/securities/company-announcements. Photographs presented herein were mostly taken prior to the COVID-19 pandemic and accordingly, have no regards to safe management

measures at workplace.

This sustainability report has been prepared by the Company and its contents have been reviewed by the Company's sponsor, ZICO Capital Pte. Ltd. (the "Sponsor"), in accordance with Rule 226(2)(b) of the Singapore Exchange Securities Trading Limited ("SGX-ST") Listing Manual Section B: Rules of Catalist.

This sustainability report has not been examined or approved by the SGX-ST and the SGX-ST assumes no responsibility for the contents of this sustainability report including the correctness of any of the statements or opinions made or reports contained in this sustainability report.

The contact person for the Sponsor is Ms. Goh Mei Xian, Associate Director, ZICO Capital Pte. Ltd. at 8 Robinson Road #09-00 ASO Building, Singapore 048544, telephone (65) 6636 4201.

ES GROUP (HOLDINGS) LIMITED SUSTAINABILITY REPORT 2020

1

CONTENTS

OUR LETTER TO STAKEHOLDERS ................................................................................................................................... 2

OUR CORPORATE PROFILE ............................................................................................................................................ 3

OUR PERFORMANCE HIGHLIGHTS ................................................................................................................................ 4

Environmental Performance Highlights ..................................................................................................................................... 4

Financial Highlights in 2020 ....................................................................................................................................................... 4

Safety Highlights ........................................................................................................................................................................ 4

OUR MILESTONES ......................................................................................................................................................... 5

OUR ACCOLADES .......................................................................................................................................................... 6

OUR STAKEHOLDERS ..................................................................................................................................................... 8

OUR COMMITMENT TO A SUSTAINABLE OPERATION .................................................................................................. 9

CORPORATE GOVERNANCE ....................................................................................................................................................... 9

OUR SUSTAINABILITY TOPICS ..................................................................................................................................... 11

OUR SAFETY AND HEALTH .......................................................................................................................................... 13

HEALTH AND SAFETY OF WORKERS ......................................................................................................................................... 13

OUR LABOUR PRACTICES ............................................................................................................................................ 17

EMPLOYMENT PRACTICES ....................................................................................................................................................... 17

DIVERSIFICATION OF WORKFORCE .......................................................................................................................................... 17

CAREER DEVELOPMENT ........................................................................................................................................................... 22

LABOUR POLICY AND RELATIONSHIP BETWEEN SINGAPORE AND OTHER COUNTRIES AND ITS RELEVANT LAWS AND REGULATIONS .......................................................................................................................................................................... 22

OUR ECONOMIC SUSTAINABILITY .............................................................................................................................. 23

PERFORMANCE IN 2020 ........................................................................................................................................................... 23

TRUE AND FAIR VIEW OF THE FINANCIAL STATEMENTS ........................................................................................................ 24

PROJECT AND QUALITY MANAGEMENT .................................................................................................................................. 25

DIVERSIFICATION OF TRADES .................................................................................................................................................. 25

MITIGATION OF IMPACT FROM CLIMATE CHANGE ................................................................................................................. 26

OUR SUPPLY CHAIN .................................................................................................................................................... 27

SUPPLY CHAIN MANAGEMENT ................................................................................................................................................ 27

OUR ENVIRONMENTAL PERFORMANCE ..................................................................................................................... 28

ENERGY CONSUMPTION .......................................................................................................................................................... 28

EMISSIONS ............................................................................................................................................................................... 28

WATER COMSUMPTION .......................................................................................................................................................... 30

EFFLUENTS AND WASTE ........................................................................................................................................................... 30

OUR EFFORTS ........................................................................................................................................................................... 30

OTHER COMPLIANCE MATTERS ............................................................................................................................................... 30

OUR REPORTING BASIS .............................................................................................................................................. 31

GRI CONTENT INDEX ................................................................................................................................................................ 31

ES GROUP (HOLDINGS) LIMITED SUSTAINABILITY REPORT 2020 OUR LETTER TO STAKEHOLDERS

2

OUR LETTER TO STAKEHOLDERS

Dear Stakeholders,

The COVID-19 pandemic is currently the focus of public attention. It has a significant impact on the life of people around the world and sharply slowed down global economic activity. As a result of the COVID-19 pandemic, companies are seeing the need to have a comprehensive business continuity plan to build a sustainable business that remain resilient amidst adversity.

Ever since the establishment of ES Group (Holdings) Limited and its subsidiaries in 1975, our vision and mission that have been instilled in us for over 45 years have brought us far, and even through tough times like previous downturns in the offshore and marine industry. In order to strengthen and to build a more sustainable business, we carefully consider environmental, social and governance (“ESG”) issues in all our strategic and investment decisions.

We seek to deliver steady value growth in our new building and repair segment, as well as our shipping segment through innovative supply chain solutions and sustainable long-term partnerships. Together with our management, our Board has determined the material ESG risks as well as the opportunities that are important steps to our Group’s long-term success.

Our core business in the new building and repair segment remains a significant

aspect of our Group’s operations. This industry is highly labour intensive. Our people are thus the most valuable resource. We are committed to invest in people development to grow the capabilities of our workforce and continue creating value for our stakeholders. Safety is the core value at ES Group. We are committed to safety and training for our workers and we strive for a “Zero Accident” goal in the shipyards. Amid the COVID-19 pandemic, the health and well-being of our employees and other stakeholders have been our top priority. We have put in place various safe management measures in accordance to the prevailing regulations, orders, advisories and guidelines issued by the Government in order to curb the spread of the virus.

Our shipping segment continues to be a significant segment for reporting as it contributed to 30.6% of our Group’s revenue in 2020. Being part of the shipping industry, our Group is aware of the carbon emission damage and hopes that ongoing efforts in reducing carbon footprint will contribute towards international efforts to tackle climate change, given that over 90% of all global trades are carried out by ships1.

As the world moves towards a lower emission future, our Group continues to support fully the decision of

International Maritime Organisation (IMO) to implement a 0.5% sulphur cap (down from 3.5%) for marine fuels in an effort to reduce the amount of sulphur oxide, from 1 January 2020 (“IMO 2020”). In view of this, our Group has switched from using heavy marine fuel oil to low sulphur fuel oil since November 2019 for our vessel, ES Aspire, to be in compliance with IMO 2020 as we strongly believe in “cleaner shipping for cleaner air”.

This is the fourth year that our Group has been publishing sustainability reports, since our inaugural sustainability report for 2017, which was published in November 2018. We have taken into consideration feedbacks on our past sustainability reports and this edition adopts a more structured and detailed explanation of our sustainability policies and efforts.

Sustainability is a collective responsibility that involves every individual. We believe by continuous collaboration with each of our stakeholders, we could create a more sustainable operation in every aspect of our Group. We hope that this report will communicate our efforts to a broader audience, not only to spur us to build an enduring and high performing business, but also to ensure we continue to commit towards greener planet.

Join us in our Voyage into Sustainability.

On Behalf of the Board of DirectorsLOW CHEE WEE

EXECUTIVE DIRECTOR, CHIEF EXECUTIVE OFFICER AND

CHIEF OPERATING OFFICER 4th May 2021

Footnote 1. Sam Meredith, A global shipping revolution is weeks away - Here are the likely winners and losers (cnbc.com 30 October 2019). Retrieved from https://www.cnbc.com/2019/10/30/imo-

2020-the-winners-and-losers-of-a-global-shipping-revolution.html on 30 April 2021.

ES GROUP (HOLDINGS) LIMITED SUSTAINABILITY REPORT 2020 OUR CORPORATE PROFILE

3

OUR CORPORATE PROFILE ES Group (Holdings) Limited (the “Company” and together with its subsidiaries, the “Group”) is a Singapore headquartered marine and offshore group that was established in 1975. With more than 40 years of operating experience, the Group builds, converts and repairs wide range of ocean-going vessels, such as tugs, barges, rigs, offshore support vessels, oil tankers and cargo ships. It has been a prominent contractor of marine and offshore structures and vessels of all types and sizes, whether afloat or dry-docked for prominent Singapore shipyard operators including Sembawang Shipyard and Keppel FELS Ltd. We have operations in Singapore, Malaysia, Thailand, Myanmar, and China with a total of 421workforce.

Since its successful listing in 2010, the Group has diversified into engineering, procurement and construction ("EPC") projects, vessel owning and chartering, as well as ship chandling and components sales, which complement its core business.

Our capabilities are listed be-low: • Ship building, repair and con-

version • Ship owning and chartering • Ship chandling and marine

supplies • Rig building and engineering

services • Offshore semi-submersible

hull and jack up rigs hull fabrications

• Offshore and onshore oil and gas related modules

• Offshore support vessels building, rigs and vessels’ upgrading repair and conversion

• Marine and offshore electrical installation and automation services

Our operations are separated into two main segments, namely: New building and repair segmentBuilding, converting and repair of a wide range of ocean-going vessels, such as tugs, barges, rigs, offshore support vessels, oil tankers and cargo ships

Shipping segmentProviding ship chartering services as well as marine supplies

Our core operations are in the new building and repair segment (“core operations” or “new building and repair segment”).


Subsidiaries / Joint Venture %

Segment New Building

and Repair Shipping

Singapore

Eng Soon Investment Pte Ltd 100

Wang Fatt Oil & Gas Construction Pte Ltd 100

ES Offshore Engineering Pte. Ltd. 100

Eng Soon Engineering (1999) Pte Ltd 100

Eng Soon Marine Pte Ltd 100

ES Shipping Pte. Ltd. 100

ES Energy Pte. Ltd. 100

ES Oil & Gas Pte. Ltd. 100

ESW Automation Pte. Ltd. 1 100

ES Chartering Pte. Ltd. 100

ES Aspire Pte. Ltd. 2 100

ProXess Engineering Pte. Ltd. (Joint Venture) 3 51

ThailandES Offshore and Marine Engineering (Thailand) Co., Ltd. 50

ChinaDalian ES Marine & Offshore Engineering Co., Ltd 100

MyanmarES Offshore and Engineering (Myanmar) Company Limited 4 100

Malaysia

ES Nautilus (M) Sdn. Bhd. 5 49 Notes:1) ESW Automation Pte. Ltd. is a wholly-owned subsidiary of ES Oil & Gas Pte. Ltd.. 2) ES Aspire Pte. Ltd. is a wholly-owned subsidiary of ES Chartering Pte. Ltd.. 3) ProXess Engineering Pte. Ltd. is jointly owned by Wang Fatt Oil & Gas Construction Pte. Ltd. (51%) and a

third-party company incorporated in Singapore (49%). 4) ES Offshore and Engineering (Myanmar) Company Limited is owned by ES Offshore Engineering Pte. Ltd.

(50%) and ES Oil & Gas Pte. Ltd. (50%). 5) The Group owns 49% equity shares of ES Nautilus Sdn. Bhd. (“ESN”). However, based on contractual

agreements between the Group and other investor, the Group holds 51% of voting power that gives it the ability to direct the relevant activities of ESN based on simple majority votes. The non-controlling interest owns 51% equity shares and 49% of voting power of ESN. Therefore, the directors of the Group determined that the Group has control over ESN and accordingly ESN is consolidated in the financial statements of the Group.

% Percentage indicated beside each subsidiary / joint venture refers to the effective interest of the corresponding subsidiary / joint venture held by the Company.

Information accurate as at date of publication.

ES GROUP (HOLDINGS) LIMITED SUSTAINABILITY REPORT 2020 OUR PERFORMANCE HIGHLIGHTS

4

474,206 26,077

15,125,862

271,184

�

4,308

125

29

6 4 5

84

27

48

20

0 0 0 00

20

40

60

80

100

2018 2019 2020 2021(target)

IFR ISR ODRIFR: Incident Frequency Rate1 | ISR: Incident Severity Rate2 | ODR: Occupational Decease

Rate3

OUR PERFORMANCE HIGHLIGHTS

Financial Highlights in 2020 Environmental Performance Highlights

Energy consumption (kWh) in Singapore by type for 2020

⛽⚡ �

⚡ : Electricity purchased from electricity provider. �: Gas purchased from gas provider. ⛽: Petrol and diesel purchased from suppliers for the direct use on vehicles in the Group �: Low Sulphur marine gas oil purchase from supplier.

SCOPE 1

SCOPE 2

Emissions in terms of CO2 equivalent (MT) for 2020

• Scope 1 Emissions refers to direct GHG emissions occur from sources that are owned or controlled by the Group, expressed in CO2 equivalent in MT, as defined in GHG Protocol “A Corporate Accounting and Reporting Standard”. Figures exclude emissions from combustion of biomass, which the Group does not have.

• Scope 2 Emissions refers to GHG from the generation of purchased electricity consumed by the Group as defined in GHG Protocol “A Corporate Accounting and Reporting Standard”.

Safety Highlights

0

2 2

0 00 0

2

1

00

0.5

1

1.5

2

2.5

FAI NLTI LTI LTA Fatality

Target ActualFAI: First Aid Injury | NLTI: Non-lost Time InjuryLTI: Lost Time Injury | LTA: Lost Time Accident

No of cases of injury by injury category for 2020, actual versus target

Injury statistics for past 3 years versus target(per million man-hours) in 2020

22.67 cents

Net Asset Value per Share

0.69 cents

Basic & Diluted Earnings per Share

17,533

336

Revenue (S$'000)Profit for the year (S$'000)

-

20,000

40,000

60,000

2018 2019 2020

N E T A S S E T S ( S $ ' 0 0 0 )

Assets

Liabilities

Net Assets / SH Equity

43,415 11,143

32,008

F I N A N C I A L P O S I T I O N ( S $ ' 0 0 0 )

Assets

Liabilities

Net Assets /SH Equity

- 10,000 20,000 30,000

R E V E N U E ( S $ ' 0 0 0 )

Singapore

Overseas

Group

-

1,000

2,000

3,000

4,000

5,000

G R O U P P R O F I T F O R T H E Y E A R

( S $ ' 0 0 0 )

19.10 22.42 22.67

0.69 3.30 0.69 -

10.00

20.00

30.00

2018 2019 2020

F I N A N C I A L R A T I O S ( P E R S H A R E , I N

C E N T S )

Net asset value

Basic and dilutedearnings

Financial highlights and trends for FY2020

ES GROUP (HOLDINGS) LIMITED SUSTAINABILITY REPORT 2020 OUR MILESTONES

5

OUR MILESTONES

1975 Eng Soon Engineering Pte Ltd was first established.

1977 Registered as a resident sub-contractor of Sembawang Shipyard Pte Ltd.

1992 Eng Soon Investment Pte Ltd was formed.

1997 Wang Fatt Oil & Gas Construction Pte Ltd was established to serve the marine industry of Singapore Technologies Marine Ltd.

1999 Eng Soon Engineering (1999) Pte Ltd was formed to provide marine piping work and mechanical installation catering for all major shipyards in Singapore.

2001 ISO 9001 was awarded to Eng Soon Investment Pte Ltd and Wang Fatt Oil & Gas Construction Pte Ltd for excellent commitment to quality.

2003 ES Offshore Engineering Pte. Ltd. was formed to provide oil rigs and semi-submersible new building and repair services for Keppel FELS Ltd.

2006 ES Offshore and Marine Engineering (Thailand) Co., Ltd. was formed and acquired a piece of land in Thapsakae, Thailand covering 70,000 sqm of land space to undertake EPC projects and provide new building services such as offshore modules and oil rigs structures.

2007 Built a 2-storey building at No. 10 Kwong Min Road with 4,700 sqft of office space and 43,000 sqft of workshop space. Therein also accommodates 383 of our marine skilled workers.

2009 Eng Soon Investment Pte Ltd, Wang Fatt Oil & Gas Construction Pte Ltd, ES Offshore Engineering Pte. Ltd. and Eng Soon Engineering (1999) Pte Ltd each attained OHSAS 18001 in Workplace Safety and Health management and BizSAFE Star Certification.

2010 July, IPO listing on the Catalist board of the SGX-ST as ES Group (Holdings) Limited.

August, secured first direct order from an international offshore engineering and construction contractor and vessel owner - Subsea 7 S.A..

October, acquired Dalian ES Marine & Offshore Engineering Co., Ltd. - a company incorporated in Dalian, People's Republic of China.

2011Delivered an offshore barge to its first direct customer Subsea 7 S.A..

2012 Successfully launched two bunker vessels - Sea Tanker I and Sea Tanker II.

2013 Successfully delivered the two bunker vessels.

Incorporated a new subsidiary - ES Energy Pte. Ltd..

Set up Loyang workshop which designs and fabricates a range of offshore structures, such as geotechnical drilling rigs, as well as provides mobilisation and demobilisation works, repair and maintenance works and other offshore support services.

2014 Incorporated a new subsidiary - ES Oil & Gas Pte. Ltd..

Entered into a joint venture with Heatec Jietong Pte. Ltd. - to develop a heating and cooling system for marine and other industries.

2015 Expand core expertise - to provide marine and offshore electrical installation and automation services.

2017 Incorporated 2 new subsidiaries - ES Chartering Pte. Ltd. and ES Aspire Pte. Ltd..

Purchase of vessel, ES Aspire, in end FY 2016.

Created ship chandling/marine supplies division to broaden customer and supplier base.

2020 Disposal of vessel, ES Bristol, completed in February 2020.

Acquisition of ProXess Engineering Pte. Ltd. in October 2020.

2021 Acquisition of vessel, ES Jewel, in March 2021

ES GROUP (HOLDINGS) LIMITED SUSTAINABILITY REPORT 2020 OUR ACCOLADES

6

OUR ACCOLADES

*Please see certification number as presented in the

respective subsidiaries’ award(s).

ISO 9001:2015 Awarded by BSI Singapore, ISO 9001:2015 sets out the criteria for a quality management system and is the only standard in the family that can be certified to. This standard is based on a number of quality management principles including a strong customer focus, the motivation and implication of top management, the process approach and continual improvement.

*Please see certification number as presented in the

respective subsidiaries’ award(s).

ISO 45001:2018 SS 506 : Part 1 : 2009 Awarded by BSI Singapore, ISO 45001:2018, along with the Singapore Stan-dards (“SS”) 506: Part 1: 2009 (Singapore’s rendition of the OHSAS 18001:2007), provide us with the elements of an effective safety management system that help organisations achieve better occupational health and safety performance and economic objectives. SS 506 : Part 1 : 2009 is replaced by ISO 45001:2018 and no longer valid after 11 March 2021.

BizSAFEAwarded by Workplace Safety and Health Council, we are awarded with the highest level of BizSAFE certification – the BizSAFE STAR, as a clear demonstration of the Group’s commitment towards workplace safety and health.

Singapore SME 1000 We are proud to be identified as the top 1000 companies in Singapore, as a mark of our continuous success and commitment to quality and to our Stakeholders.

ES Group (Holdings) LimitedSME 1000

Eng Soon Investment Pte LtdISO 9001:2015 Fabrication and repair of steel works for vessels and offshore structures FS 95003 ISO 45001:2018

Fabrication and repair of marine steelworks for vessels and offshore structures; and Provision of erection and dismantling of marine scaffolds for vessels and offshore structures

OHS 545900

SS 506 PART 1: 2009

Fabrication and repair of marine steelworks for vessels and offshore structures; and Provision of erection and dismantling of marine scaffolds for vessels and offshore structures

OHS 696393

BizSAFE STAR E00215 Wang Fatt Oil & Gas Construction Pte LtdISO 9001:2015 Fabrication and repair of steelworks for marine vessels FM 60165

Provision of Mechanical and Electrical related activities for Construction industry (Construction) Q-SG-102 ISO 45001:2018

Fabrication and repair of marine steelworks for vessels and offshore structures; and Fabrication and repair of marine piping and mechanical works for vessels and offshore structures

OHS 551264

Provision of Mechanical and Electrical related activities for Construction industry (Construction) OH&SMS-SG-075 SS 506 PART 1: 2009

Fabrication and repair of marine steelworks for vessels and offshore structures; and Fabrication and repair of marine piping and mechanical works for vessels and offshore structures

OHS 696410

BizSAFE STAR E03583

ES GROUP (HOLDINGS) LIMITED SUSTAINABILITY REPORT 2020 OUR ACCOLADES

7

ES Offshore Engineering Pte. Ltd. ISO 9001:2015 Fabrication, repair and modification of steelworks, piping and mechanical works for marine

vessels, oil and gas, offshore and onshore structures FS 615591

ISO 45001:2018

Fabrication and repair of marine steelworks, piping, mechanical works, and provision of erection / dismantling of scaffolds for vessels and offshore structures

OHS 551266

SS 506 PART 1: 2009

Fabrication and repair of marine steelworks, piping, mechanical works, and provision of erection / dismantling of scaffolds for vessels and offshore structures

OHS 694792

BizSAFE STAR E00048 Eng Soon Engineering (1999) Pte LtdISO 9001:2015 Provision of Mechanical and Electrical related Installation and Maintenance activities (Process

Construction and Maintenance Sector) Q-SG-103

ISO 45001:2018

Fabrication and repair of marine piping and mechanical works for vessels and offshore structures

OHS 551265

Provision of Mechanical and Electrical related Installation and Maintenance activities (Process Construction and Maintenance Sector)

OH&SMS-SG-076

SS 506 PART 1: 2009

Fabrication and repair of marine piping and mechanical works for vessels and offshore structures

OHS 696396

BizSAFE STAR E00047 Eng Soon Marine Pte LtdISO 9001:2015 Fabrication and repair of marine steelwork, piping, mechanical works, and provision of erection

and dismantling of scaffolding for vessels and offshore structure; Provision of freight, trucking, warehousing and ship chandlering services; and Provision of supply and distribution of marine and offshore related equipment

15869

ISO 45001:2018

Fabrication and repair of marine steelwork, piping, mechanical works, and provision of erection and dismantling of scaffolding for vessels and offshore structures; Provision of freight, trucking, warehousing and ship chandlering services; and Provision of supply and distribution of marine and offshore related equipment

O-2361

BizSAFE STAR E37640

Above: Weekly Health, Safety and Environment (HSE) briefing to company employees

ES GROUP (HOLDINGS) LIMITED SUSTAINABILITY REPORT 2020 OUR STAKEHOLDERS

8

OUR STAKEHOLDERS

Stakeholders of the Company (“Stakeholders”) referred in this report are various groups of people who uses this report, alongside with the Annual Report of the Company, which is published separately, to garner information on our sustainability efforts and the relevant risks, impacts, and opportunities arising from the relevant sustainability elements. Stakeholders include our shareholders, customers, suppliers, employees and government, as detailed below.

We reach out to the Stakeholders by means of published documents on our website and on the Singapore Exchange (“SGX”) website.

Stakeholders working within the Group are free to contact us using the established reporting lines or whistle blowing procedures, whereas Stakeholders outside the Group can reach out to us via our contact details listed in our website or under the section “Our Reporting Basis” of this report.

The Group does not have an active engagement approach such as surveys and discussions group, as the Group is still in the process of maturing its Sustainability Report and its topics and factors (refer to the section “Our Sustainability Topics” of this report) before we are able to have a meaningful and fruitful engagement with our Stakeholders.

Shareholders Shareholders play an important role in the control, financing, and governance of the Group’s business. Shareholders are concerned with the going concern of the Group and the maximisation of returns on the capital they have invested. The Group’s commitment to a sustainable operation is their utmost interest as we continue to strive for excellence in alignment of their interest.

CustomersIn line with the Group’s Vision and Mission, we believe that meeting customers’ satisfaction and excellence in quality will provide the best basis to retain customers and ensure a sustainable operation.

SuppliersStrong and effective relationships with our suppliers give our business better strategic advantages, which includes access to resources, greater supplier support, and lower costs. Suppliers will be interested in our financial performance in terms of payment ability so as to decide on the continuance of our working relationship in the long run.

Employees As a labour-intensive operation with a huge labour force, the Group focuses on human resource related policies (e.g. merit-based and non-discriminatory recruitment; grievance procedures), competitive remuneration condition and the safety of our employees, which are crucial factors for attracting and retaining the best employees, and employees’ motivation and commitment to the Company.

GovernmentThe relevant statutory boards of the Government will be interested in how we have imposed relevant internal controls and processes to ensure that all applicable laws and regulations have been adhered to.

ES GROUP (HOLDINGS) LIMITED SUSTAINABILITY REPORT 2020 OUR COMMITMENT TO A SUSTAINABLE OPERATION

9

OUR COMMITMENT TO A SUSTAINABLE OPERATION

For the past 40 over years, we have been a quality driven service provider in the offshore and marine industry committed to uphold a high level of customers’ satisfaction. Along the journey, we have recognised that the Group’s activities have a broad impact on the social, environmental, and financial aspects within the Group and outside the Group. Hence, we are committed to work with the Stakeholders to address all sustainability concerns – minimising the unfavourable impact and taking advantage of the favourable opportunities – with our vision and mission governing our operation.

Voyaging into Sustainability We have published our first Sustainability Report (for the financial year ended 31 December 2017) in November 2018, driven by the

requirement of SGX Catalist Rules, which marks our first embarkation to the road of sustainability.

In 2021, the fourth publication of our Sustainability Report (for the financial year ended 31 December (“FY”) 2020) was updated, aiming at improving the quality of the report in terms of compliance (refer to the section “Our Reporting Basis” of this report for more information), depth, relevance, and understandability.

We believe that the driver for sustainability must first start from a sound and effective Corporate Governance that propagates across each function of our Group, which we will detail further below.

CORPORATE GOVERNANCE In a glance What was said in 2019 (target for 2020)

What happened in 2020 What we plan to do next (target for 2021)

No incident of reportable misconducts during the financial year.

No incident of reportable misconducts occurred during the financial year.

Maintain the current performance of: No incident of reportable

misconducts during the financial year.

Group’s Corporate Governance Structure

Board of Directors

Chairman

Chief Executive Officer

Company Secretary

Audit and Risk Committee

Nominating Committee

Remuneration and Compensation Committee

External Auditors

Internal Auditors

Compliance Committee

Our Vision We endeavour to be a world leader in the offshore and marine industry, providing innovative products and solutions that surpass our clients’ expectations and align with their future growth.

Our Mission ● To provide world-class services

without compromising on safety.

● To continuously improve and enhance our technologies, work processes as well as the knowledge and skills of our workforce to cater to evolving customer demands.

● To be committed in working with all stakeholders in achieving common goals and results.

ES GROUP (HOLDINGS) LIMITED SUSTAINABILITY REPORT 2020 OUR COMMITMENT TO A SUSTAINABLE OPERATION

10

Management Approach The board of directors of the Company (the “Board” or the “Directors”) and management of the Company (the “Management”) believe that it is important to establish good corporate governance within the Group as this provides the foundation for a well-managed, sustainable and efficient organisation. This can in turn sustain good business performance and safeguard the interests of the Stakeholders. The Board is committed to continually develop and uphold high standards of corporate governance, guided by the principles and guidelines of the Singapore Code of Corporate Governance 2018 (the “Code”) issued by the Monetary Authority of Singapore. A full detailed Corporate Governance Report can be found in the Company’s Annual Report 2020 pages 19 to 48.

Whistle-Blowing Whistle-blowing policies have been in place since 2010. The Group encourages employees to report in good faith and in confidence, without

fear of reprisals, concerns about possible improprieties in financial reporting or other matters to the chairman of the Audit and Risk Committee. Reportable conducts include, but are not limited to, fraud, corruption, illegality, safety violations, and serious misconduct that contravene the procedures set by the Group that may lead to legal action and/or losses for the Group. Losses can include financial losses, non-financial losses, and tarnish of reputation of the Group.

Whistle-blowing policy and whistle-blowing reports received (if any), will be assessed by the Audit and Risk Committee for appropriate action.

No incident of reportable misconducts occurred during FY2020.

Sustainability Management Sustainability matters are managed by the Compliance Committee (“Committee”). The Committee, was first set up in 2010 to implement and

review the effectiveness of the compliance framework of the Group with the SGX Catalist Rules, compliance with legislation and regulations imposed by the relevant authorities, as well as the liaison with professional advisors on all corporate documents and actions (e.g. announcements, circulars, etc.).

The Committee also spearheads and manages all sustainability management matters, aligned with the requirements imposed by the SGX Catalist Rules, which includes: Setting the direction of the Group’s

sustainability efforts. Identifying and reviewing the

sustainability factors. Reporting the identified factors to the

Board at least once annually. Reporting identified factors as

relevant to Stakeholders via the published sustainability report.

The Committee reports to the Audit and Risk Committee.

Above: Our shipyard in Thapsakae, Thailand, with 70,000 sqm of land space to undertake EPC projects and provide new building services such as offshore modules and oil rigs structures. We have successfully completed two EPC projects in this shipyard, and have successfully launched and delivered them to our customers.

ES GROUP (HOLDINGS) LIMITED SUSTAINABILITY REPORT 2020 OUR SUSTAINABILITY TOPICS

11

OUR SUSTAINABILITY TOPICS

Our Assessment Processes Sustainability topics primarily revolve around the operational aspects of our business, and are inherent factors arising from within the Group. They are deemed material to either impact our businesses if these factors are poorly managed or will have a direct impact on our Stakeholders in their decision-making processes, or on the economic, environmental, and social factors of using our products and services.

Other factors include external factors outside the Group (such as political development internationally or locally, socio-economic factors, environmental issues, and so on) where these factors will have material impact over the Group’s operational performance, economically or socially.

As introduced in the section “Our Corporate Profile” in this report, our operations are separated into two main segments. In the application of materiality for the identification of material sustainable topics, we looked into these two main segments and their presence in the various geographical locations where the operations of the respective segments are. We further identify whether the operations are significant to focus in the scope of our reporting.

We then proceed to identify the material Sustainability Topics at a broad level, as presented in the Material Topic Matrix (see Table 2). The accompanying risks, impacts and opportunities factors under each Sustainability Topic (“Sustainability Factors”) are then assigned and presented in the following Identified Sustainability Factors Table (see Table 3).

Most of our Sustainability Topics revolve around the new building and repair segment as it is the core business of the Group. The Group continuously assess, based on events occurring both internally and externally, information and feedbacks received from Stakeholders, the relevance and materiality of each Sustainability Topic and Factors and shall report based on the latest relevant material Sustainability Topics and Factors.

Specific management approach is further detailed in each Sustainability Topic.

Changes to Sustainability Topics In response to SGX expectations for COVID-19 related disclosures, we have set out our plans and strategies to recover from the COVID-19 pandemic under the Safety and Health topic in this report.

We have also reassessed our material Sustainability Topics and Sustainability Factors but no changes have been made to the Sustainability Topics and Sustainability Factors from last year report.

Table 1: Segments and the corresponding geographical presence in 2020

Segment New Building and Repair Shipping

Loca

tion

Singapore

Malaysia

Thailand

Myanmar

China Significant operation present Operation present but insignificant No operation present

Above: A crew vessel undocking after completion of repair works

Above: Company CEO observing lifting activity during site visit

ES GROUP (HOLDINGS) LIMITED SUSTAINABILITY REPORT 2020 OUR SUSTAINABILITY TOPICS

12

Table 3: Identified Sustainability Factors

New Building and Repair Shipping

Mat

eria

l Sus

tain

abili

ty T

opic

s

Safety and Health Health and Safety of Workers

Labour Practices Employment Practices

Diversification of Workforce

Career Development

Labour Policy and Relationship between Singapore and Other Countries and its Relevant Laws and Regulations

Economic Sustainability

True and Fair View of the Financial Statements

Project and Quality Management

Diversification of Trades

Mitigation of impact of Climate Change

Supply Chain Supply Chain Management

Environmental Performance

Energy Consumption

Emissions

Water Consumption

Effluents and Waste

Corporate Governance

Corporate governance efforts can be found detailed in our Annual Report 2020 pages 19 to 48

Social Environmental Economical Governance

Table 2: Material Topic MatrixIm

port

ance

to S

take

hold

ers

High

M

ediu

m

Low

Low Medium High

Impact / Opportunities to the Group Social Environmental Economical Governance

Economic Sustainability Safety and Health

CorporateGovernance

Environmental Performance Labour Practices

Supply Chain

ES GROUP (HOLDINGS) LIMITED SUSTAINABILITY REPORT 2020 OUR SAFETY AND HEALTH

13

44

10

4 2

19

10

3 2 2

7

5

1 10 0 0 0 00

5

10

15

20

2017 2018 2019 2020 2021(target)

FAI NLTI LTILTA Fatality

29

6 4 5

84

27

48

20

0 0 0 00

102030405060708090

2018 2019 2020 2021(target)

IFR ISR ODRIFR: Incident Frequency Rate2 | ISR: Incident Severity Rate3 | ODR: Occupational Decease

Rate4

OUR SAFETY AND HEALTH In a glance What was said in 2019 (target for 2020) What happened in 2020 What we plan to do next (target for 2021) LTA Cases: Capped at 0 IFR: Capped at 0 ISR: Capped at 0

LTA Cases: 1 IFR: Capped at 4 ISR: Capped at 48

LTA Cases: Capped at 0 IFR: Capped at 5 ISR: Capped at 20

Management approachOur core business is a manpower-centric operation, and this reflects the importance in maintaining a healthy workforce and a safe working environment. High accident rate in the shipyard will reflect a risky work environment with unacceptable human costs and may impact morale and the confidence of the workers. It will also expose the Group to potential litigation as well as fines from authorities.

We are devoted in maintaining a healthy workforce and a safe working environment through the efforts detailed below, and further testified and audited with the attainment of ISO 45001:2018 and BizSAFE Star.

HEALTH AND SAFETY OF WORKERS Accidents are unforeseeable events and may not be entirely avoidable. Nonetheless the Group aims to achieve a ‘Zero Accident’ goal with adopted measures such as educating workers and implementing accident preventive procedures. Further initiatives include inculcating a ‘Safety First’ mindset to all workers on the ground as well as having an adequate number of safety officers on board vessels to supervise and ensure safety regulations are followed by workers.

Safety starts from every individual, and that is where inculcating a ‘Safety First’ mindset is the utmost importance in achieving a ‘Zero Accident’ goal. This is done by emphasising safety matters during daily and weekly site briefings, putting up safety information posters around the site as well as implementing punitive system to penalise workers who knowingly breach safety regulations. During lunch time, workers are allowed to take a nap to recharge and remain alert for the remaining of the day.

To further encourage individuals to be responsible for their own safety and people around them, the Group awards top performers during our annual Safety

Award Presentation to recognise the efforts put in by individuals. All workers are appraised individually by the Department Manager based on their safety knowledge, number of safety infringements, number of accidents and incidents, proficiency in material handling, and so on. Top performing workers are then selected and awarded a Certificate of Recognition for the outstanding performance in Workplace Safety and Health for the year.

Another level of safeguard over safety is by stationing safety officers on board vessels to supervise and ensure safety regulations are followed by crew and workers. Supervisors working on board will provide an additional pair of eyes on safety. The Group ensures both the safety officers and supervisors are adequately trained and updated by sending them to courses (e.g. Shipyard safety induction course).

Our commitment to achieve a ‘Zero Accident’ goal is further demonstrated with the achievement of safety certification ISO 45001:2018 and BizSafe Star. Annual audit is required to ensure that safety procedures are intact and followed before certifications can be renewed.

Table 4: Number of cases of injury by injury categories for 2020, actual versus target

Table 5: Number of cases of injury by injury categories

FAI: First Aid Injury | NLTI: Non-lost Time InjuryLTI: Lost Time Injury | LTA: Lost Time Accident

Footnotes 2. Incident Frequency Rate (“IFR”), also known as Injury Rate in the GRI Standards, is expressed in number of injury cases (all cases) against total man-hours (in millions) for the calendar year. 3. Incident Severity Rate (“ISR”), also known as Lost Day Rate in the GRI Standards, is expressed in number of man-days lost (LTA and Fatality) against total man-hours (in millions) for the

calendar year. 4. Occupational Disease Rate (“ODR”) is expressed in number of occupational disease case against total man-hours (in millions) for the calendar year).

Table 6: Injury statistics for past 3 years vs target (per million man-hours)

0

2 2

0 00 0

2

1

00

0.5

1

1.5

2

2.5

FAI NLTI LTI LTA FatalityTarget Actual

FAI: First Aid Injury | NLTI: Non-lost Time InjuryLTI: Lost Time Injury | LTA: Lost Time Accident


14

Safe Working Environment Injury statistics as seen in Tables 4 to 6 are data tabulated from the new building and repair segment in the shipyard in Singapore for the Group, and consists wholly of our own male employees (females non-executive holds administrative roles in the offices – refer to the section “Employment Practices – Diversification of Workforce” in this report for more information) in the shipyard. No third parties’ workers are engaged.

The categories of injury are defined below: First Aid Injury (FAI): Incidents that

require first aid treatment and are considered minor. The worker will be able to work as per normal.

Non-lost Time Injury (NLTI) Restricted Work Days Case (RWDC):Injury that are moderately light but require more medical attention as compared to FAI. According to doctor’s instructions / recommendations, the worker will still be able to work on the day of incident, but on work that are deemed to be light duty and will not aggravate his injury further.

Lost Time Injury (LTI): Any work-related injury or illness which prevents an employee from doing any work after an incident and / or being hospitalised, but is not within the scope of Lost Time Accident below.

Lost Time Accident (LTA): A recordable incident whereby an employee is not able to return to work or is assigned restricted work on the day following the incident and / or hospitalised. ‘Recordable’ is determined by a medical leave of more than 3 days, or hospitalisation for more than 24 hours.

The Group has seen a decrease in the Incident Frequency Rate from 6 cases per million man-hours in 2019 to 4 cases per million man-hours in 2020. This was mainly due to the decrease in number of cases of NLTI and LTI, which translated to an Incident Severity Rate of 48 man-days lost per million man-hours in 2019, as compared to 27 man-days lost per million man-hours in

2020. The number of LTA cases remains at 1 in both 2020 and 2019.

The Group continues to strive towards ‘Zero Accident’ goal and targets to cap the number of LTA cases in 2021 at zero case and the IFR, ISR and ODR to be capped at 5 cases per million man-hours, 20 man-days lost per million man-hours and zero case per million man-hours, respectively.

All safety accidents must be reported to the safety officer. In an event of a workplace injury, the worker is required to report directly to the immediate supervisor on the incident or accident. The supervisor will then immediately report to the safety officer with details on how the incident or accident occurred, the exact time and location, and the injury sustained by the worker during the incident or accident.

Above: Safety harnesses is a must for workers when working in height on-board vessels. Below: A worker welding, with a team of supervisor and safety officers doing their safety inspection rounds. All of them had donned their safety equipment.


15

For prompt medical attention, workers are directed to nearby general practising medical clinics and private hospitals, in addition to government hospitals. In compliance to the local foreign worker legislation, workers are covered with the necessary insurance policies.

Safe Living and Working Environment Majority of our workers in the shipyard stays in the dormitory, which includes rented dormitory (approved by Ministry of Manpower) as well as our own dormitory. For rented dormitory, rules and regulations are imposed by the landlord to ensure that the dormitory is kept in healthy and liveable conditions. The onus of the creation and maintenance of a healthy and safe living environment for our own dormitory lies in our hand.

We have imposed rules and regulations on all workers living in our dormitory and ensure that all workers abide by them to maintain a healthy and safe living environment. Serious offences such as display of violence, indecent behaviour, gambling, shoplifting, drug abuse and money lending activity shall result in eviction of the workers from the dormitory. Other offences, such as smoking at undesignated area, indiscriminate parking of bicycles, failure to hang clothes on assigned racks, failure to tidy personal area and improper disposal of rubbish, attract fines. Spot checks by supervisors and human resource staff are conducted at random so as to ensure that rules and regulations are adhered to, where punitive measures are imposed against workers in breach of the rules and regulations.

We have also, in line with Building and Construction Authority’s rules and regulations, Ministry of Manpower Occupational Safety and Health (“OSH”) regulations as well as ISO 45001:2018, implemented an Operational Control Procedure (“OCP”). The OCP detailed the following: Responsibility to the relevant

parties in the Emergency Response Team (“ERT”).

Identification, assessment, and prevention of OSH Emergencies Risks.

Emergency response protocol in the event of an emergency.

Site clean-up and follow-up protocol.

The OCP is applicable to the workshop, office and dormitory (all situated at the same location at 10 Kwong Min Road) owned by the Group, in which it is extended to all personnel working at the workshop and office, a tenant renting partial of the workshop space, and workers staying in the dormitory. The effectiveness of the emergency response protocol is assessed every year by carrying out Emergency Evacuation Drill (the “Drill”). Due to the COVID-19 pandemic, the Drill for FY2020 was delayed to 13 January 2021. Notwithstanding the delay, the Drill was conducted efficiently and successfully in accordance to the OCP, where all company personnel and tenants were accounted for at the muster point within 17 minutes from the start of the Drill.

Global warming and safety Global warming has been affecting the whole world where extreme changes to the weather can be observed around the globe.

In Singapore, we are observing higher temperatures and intense heat, accompanied by erratic thunderstorms. These expose our workers in our core business working in shipyards on board vessels to higher risk of heat injury and lightning risks arising from erratic thunderstorms.

Safety officers are tasked to ensure that the workers, including themselves, are protected against such weathers. Workers exposed to intense heat are given frequent breaks to properly hydrate and cool themselves to prevent heat injury, and in the case of wet weather, workers on board will be evacuated from open space to sheltered areas.

COVID-19 measures and recovery plans The COVID-19 pandemic has had a significant impact globally, especially to the marine and offshore industry that we are operating in, where the operation is highly labour intensive with a huge labour force working in close physical proximity with one and another and in enclosed spaces. In order to provide a safe working environment for employees and prevent the spread of COVID-19, we follow strictly to the regulations, orders, advisories and guidelines issued by

Above: “Safe Cycling Starts With Me” – A safety cultivation message, an effort made by the Group together with the Shipyard.

Below: Covid-19 Safe Management Measures Awareness briefing conducted at site.


16

government bodies, including Ministry of Manpower (MOM), Economic Development Board (EDB) and Health Promotion Board (HPB). Various precautionary measures have been implemented, which can be summarised to those applied to office staffs and those applied to shipyard workers.

For office staffs • Staffs are required to reduce

physical interaction and maintain social distancing at workplace.

• Staffs are required to wear a mask at all times and maintain good hygiene.

• Staffs and visitors are required to use SafeEntry to check in/out when arriving/leaving the office.

• Staffs are required to take their body temperature twice daily. They are also required to leave the office immediately and see a doctor if their temperature is too high.

• Staffs are allowed to work from home where applicable.

• Shorten working hours so that staffs can avoid to travel during peak hour, especially for those commuting to work by public transport.

• Reduce physical meetings by having all meetings to be conducted by electronic means if applicable.

For shipyard workers • A system of Safe Management

Measures (SMM) at worksites has been implemented. Detailed monitoring plan is laid out in a handbook which gives detailed outline of Safe Management Measures implemented to all operations and activities so as to minimize the risk of COVID-19 spread within the Company and promote a safe working environment for employees. It also identifies potential risks and non-compliance to the Safe Management Team and introduces corrective action.

• Pre-screening and segregation of teams to reduce physical interaction and ensure safe distancing at worksite. Before entering work site, workers have to take the required swab test, being identified as "Green" and approved by EDB. Even

after returning to work site, workers are required to go for swab test every 2 weeks. We have a total of 319 workers working in shipyards, of which 163 were tested positive for COVID-19 virus and have since fully recovered. As at the date of this report, majority of all our workers (316) have returned to work, except for 3 workers who have returned to their home country for holidays.

• In order to support contract tracing, all workers are required to download and active the TraceTogether software application. Workers and visitors must declare via SafeEntry or other means permitted by the government before the person is allowed to enter the premises.

• Regular temperature screening are conducted twice daily on the workers.

• Workers are required to reduce physical interaction and ensure safe distancing at worksites.

• All onsite personnel and workers are required to wear masks and other necessary personal protective equipment at all times. We will ensure that sufficient masks are provided to all workers.

• Any worker who is feeling unwell or showing symptoms of illness should report to his superior, leave the workplace and consult a doctor immediately.

• Workers are required to observe good personal hygiene e.g. wash their hands regularly and refrain from touching their face.

There are 3 dormitories that are currently being occupied by our shipyard workers, Aluania Lodge (rented), woodlands dormitory (rented) and 10 Kwong Min Road (Company owned). Some modifications have been made to the dormitory at 10 Kwong Min Road to ensure safe distancing to curb the spread of COVID-19. The building at 10 Kwong Min Road has 2 floors, of which the first floor is used as office, while the second floor is used as dormitory. The modifications include but not limited to the following:

• Inserted a board to break dormitory to 2 blocks, Block A and Block B to

prevent interactions between Block A and Block B. So that if workers at Block A infected, workers at Block B won't be affected.

• Created an isolation room of 8 beds and bought 2 mobile toilets for isolation purpose.

• Created new washing point for workers to come back to wash their hand and boots before entering the dormitory.

The list above is not exhaustive, and such modifications are part of the precautionary measures implemented by the Company. As we are resident contractors and common contractors in the Marine Shipyard Sector, we are required to also adhere to a list of COVID-Safe Restart Criteria issued by EDB and Enterprise Singapore before the Company can resume its business activities. Even though close to full force of the Company's employees and workers have resumed to work, we continue to ensure compliance with the relevant safe management measures.

Compared to past crises, the COVID-19 pandemic has had a more severe economic impact. As the COVID-19 pandemic continues to impact people and economies around the world, full recovery from COVID-19 could be a long journey ahead. With the support from Singapore government, especially in monetary term through job support scheme, foreign worker levy rebate, rental relief etc., it definitely has eased the Company's financial burden for the business to carry on. Despite huge uncertainty about how long the recovery process would take, the Management is ready to lead the team to adapt to the changing environment so as to rebound stronger.

ES GROUP (HOLDINGS) LIMITED SUSTAINABILITY REPORT 2020 OUR LABOUR PRACTICES

17

OUR LABOUR PRACTICES In a glance What was said in 2019 (target for 2020)


The following information was presented: Employment practices Diversification information based on

employment categories, nationality, age group and gender

Labour policies, law and regulations Career development efforts

Assessed and confirmed Sustainability Factors identified in earlier year remain valid

Update information for Sustainability Factors

Continue to assess the validity of the Sustainability Factors and the information contained therein.

Management Approach As our core business function relies heavily on manpower, labour practices in managing both employees’ welfare and development, labour supply and costs affected by macro-factors such as inter-country relationship, and fair and equal employment practices have a direct impact on the sustainability of our operation, in terms of the costs of our operations and the employees’ job fulfilment. The Group aims to create a working culture that is fair, equal, inclusive, diverse, and free from any form of discrimination.

EMPLOYMENT PRACTICES The first step to achieving the ideal work culture is to have a sound system of employment policy. Such policy includes care of the responsible hiring and fair compensation commensurate with non-bias and commonly accepted indicators and rights of employees.

Work-life balance The Group understands the importance for our employees to strike a balance between their work commitment and their personal life. We provide a certain degree of flexibility by supporting their need to apply urgent leave to take care of their personal matters, particularly to family related matters, or pre-approved tweak in their work schedule to enable them to pick their children or go for night classes for skill upgrade courses.

The Group also adheres to the applicable employment legislation to provide paternal, maternal and childcare leave for employees to take care of their children as and when required.

Fair compensation and benefits The Group commits to compensating our employees fairly and commensurate with employees’ position and experience, free from any discrimination. Employee’s compensation in Singapore is not subjected to minimum wages. Employees are also given benefits and compensation

for overtime work prescribed by the applicable employment law and regulations.

Rights of employees The Group does not currently have any policy to either advocate or restrict rights of our employees to associate freely, engage in collective bargaining, participate in trade / labour union, as well as seek representation as long as it is permitted by the governing law and regulations. There is no collective bargaining agreement for employees in the Group.

In any event of significant operational changes that affects an employee, the employee will be notified at least one month in advance for them to have the necessary preparation.

Ethical and responsible hiring The Group practises ethical and responsible hiring. We do not practice nor accept any hiring of any persons that are either below the prescribed legal working age by the governing employment law and regulation of the country our operations are present (known subsequently as “child labour”) and the hiring of persons that are unwilling, forced, bonded, or other forms of compulsory forced labour that goes against the will and the natural course of the accepted norm of an employment process.

In Singapore, employments, where applicable, are approved and/or submitted to the respective Government authorities overlooking labour matters. This ensure that employees are of legal age and protected by the employment legislation which forbids child, forced and compulsory labour.

We aim to ensure that our suppliers do their part in respect to their employees’ rights and practice ethical and responsible hiring through efforts detailed in Supply Chain Management.

The Group has not been subject to human rights review or human rights impact assessment at any geographical location of which we operate in.

DIVERSIFICATION OF WORKFORCE An inclusive and diverse working culture requires an employment policy that accepts people of all backgrounds and not based on prejudicial selection.

The Group understands the importance and benefits of having a diversified workforce, which includes:

• Macro-factors relating to labour policy and relationship between Singapore and other countries, affecting supply of labour and the associated cost. By recruiting workers of different nationality, this


18

0% 20% 40% 60% 80% 100%

Non-Executive

Executive

Middle Management

Senior Management

Governance

Group

P E R C E N T A G E O F N A T I O N A L I T Y D I V E R S I F I C A T I O N ( % ) I N 2 0 1 9

Singaporean Malaysian Chinese (PRC) Indian Bangladeshis Others

0% 20% 40% 60% 80% 100%

Non-Executive

Executive

Middle Management

Senior Management

Governance

Group

P E R C E N T A G E O F N A T I O N A L I T Y D I V E R S I F I C A T I O N ( % ) I N 2 0 2 0

Singaporean Malaysian Chinese (PRC) Indian Bangladeshis Others

Singaporean

Malaysian

Chinese (PRC) Indian

Bangladeshis Others

17 6 1 38 32 6

33 33 - - - 33

86 14 - - - -

25 50 - 8 - 17

69 20 6 4 - -

8 2 - 45 38 7

Singaporean

Malaysian

Chinese (PRC) Indian

Bangladeshis Others

16 5 1 41 33 5

67 - - - - 33

86 14 - - - -

27 55 - 9 - 9

69 22 6 4 - -

8 2 - 47 38 6

Table 7: Diversification of nationality for each employment category for 2020 & 2019 (%) (‘Others’ comprises Thai, Burmese and Danish nationals)


19

Table 8: Diversification of gender for each employment category for 2020 & 2019 (%)

0% 20% 40% 60% 80% 100%

Non-Executive

Executive

Middle Management

Senior Management

Governance

Group

P E R C E N T A G E O F G E N D E R D I V E R S I F I C A T I O N ( % ) I N 2 0 1 9

MALE FEMALE

0% 20% 40% 60% 80% 100%

Non-Executive

Executive

Middle Management

Senior Management

Governance

Group

P E R C E N T A G E O F G E N D E R D I V E R S I F I C A T I O N ( % ) I N 2 0 2 0

MALE FEMALE

Male Female

93 7

67 33

86 14

100 -

76 24

96 4

Male

Female

95 5

67 33

86 14

100 -

76 24

97 3


20

Table 9: Diversification of age group for each employment category for 2020 & 2019 (%)

0% 20% 40% 60% 80% 100%

Non-Executive

Executive

Middle Management

Senior Management

Governance

Group

P E R C E N T A G E O F A G E G R O U P D I V E R S I F I C A T I O N ( % ) I N 2 0 1 9

<30 30-50 >50

0% 20% 40% 60% 80% 100%

Non-Executive

Executive

Middle Management

Senior Management

Governance

Group

P E R C E N T A G E O F A G E G R O U P D I V E R S I F I C A T I O N ( % ) I N 2 0 2 0

<30 30-50 >50

<30 30 to 50 >50 23 61 16

- 33 67

- 57 43

- 33 67

12 47 41

26 64 10

<30 30 to 50 >50 27 59 14

- - 100

- 57 43

- 36 64

12 51 37

30 61 9


21

Non-Executive83%

Executive11%

Middle Management

3%

Senior Management2%

Governance1%

0.0%

2.6%

0.5%

17.5%

0.0%

3.8%

0.0% 5.0% 10.0% 15.0% 20.0%

Female

Male

T U R N O V E R R A T E 6 ( % )<30 30 to 50 >50

0

11

2

73

0

16

0 20 40 60 80

Female

Male

N U M B E R O F T U R N O V E R 5

<30 30 to 50 >50

0.0%

0.5%

0.7%

2.6%

0.2%

0.5%

0.0% 1.0% 2.0% 3.0%

Female

Male

H I R I N G R A T E 6 ( % )<30 30 to 50 >50

0

2

3

11

1

2

0 5 10 15

Female

Male

N U M B E R O F H I R E S<30 30 to 50 >50

21.5%

16.0%

4.5%

24.4%

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0%

Hire

Turnover

T U R N O V E R / H I R I N G R A T E 6 ( % )2020 2019

prevents over-reliance on one or two nationality group(s) and mitigate the impact on unfavourable labour changes resulting from changes to labour policy and relationship between Singapore and the said countries.

• Socio-factor where workers learn how to interact, work and live with people of different ethnic groups and nationalities while working, and also adapting to the society outside work. This enable workers to be able to adapt and live in a cosmopolitan nation like Singapore.

• People from different location, coming from different culture, can propagate different positive work habits and input creative solutions to tackle challenges.

• Reduce the chance of possible powering of one particular nationality, ethnic or religious group.

For safety and work efficiency, the Management recognises that language and especially language barriers are important factors to be considered in hiring and work team grouping.

It is the Group’s policy to be open in the recruitment of persons of different background (e.g. gender, nationality, age and so on) for all positions (including office positions).

Our challenges in diversification of workers lies on the gender diversification, where the bulk of our workforce in the core business is nature of work in the shipyard demanding physical strength and exposure to the hot sun as well as the already male-dominated environment that female would normally refrain themselves from applying.

All employees are permanent and full-time staff during the years 2020 and 2019.

Please refer to Tables 7 to 10 for the information on the diversity of our workforce.

Footnotes 5. Turnover refers to the total number of employees that left the Group. 6. Rate is expressed as turnover/hire against total employees as at year end excluding people from governance category.

Table 10: Composition of workforce in the Group for 2020 (%)

Table 11: Number of employees’ turnover and employee turnover rate (%) for 2020

Table 12: Number of employees hired and employee hiring rate (%) for 2020

Table 13: Employee turnover and hire rate for 2020 and 2019 (%)


22

CAREER DEVELOPMENT Attracting and retaining talents is an important step in achieving the ideal work culture.

Furthermore, our reliance on skilled personnel (such as heavy equipment operators, draughtsmen, welders, grinders, etc) is unavoidable. Skilled personnel with the appropriate experiences and/or requisite certifications in our industry are limited and competition for such personnel is intense. Hence, there is a need to continue to retain the skilled personnel that we have trained.

Therefore, we believe in the development of our workers and this is in line with our mission. We send our employees for training not just for single trade but multiple trades so that workers can be re-deployed whenever reshuffling of workforce is required.

This give them a sense of job satisfaction, personal development and enhance job security and employability of each employee, which we hope will inspire greater intrinsic value within themselves.

This policy also enables us to be less reliance on the external labour market, improve efficiency and quality in the work produced by the workers, as well as give workers the opportunity to develop and excel within the Group.

Furthermore, all employees are subjected to performance review, regardless of employment category or gender and without prejudice. These performance reviews are conducted on an annual basis where employees’ performance during the year are assessed. Through these appraisals,

Management can identify areas for development of each employee’s skill set.

New hire and turnover of employees Despite the efforts stated above to retain our skilled workers, the Group practices lean cost management (since 2015) by managing and restructuring our headcount to align with the demand in the marine, oil and gas industries. The employee turnover and hire rates are expected to stabilise as the market stabilises. Please refer to Tables 11 to 12 for the data on new hire and turnover of employees.

Our turnover rate has increased from 16.0% in 2019 to 24.4% in 2020, while the hire rate has decreased from 21.5% in 2019 to 4.5% in 2020 (refer to Table 13). Overall, this resulted in the Group having a smaller headcount in 2020, as compared to 2019. This was mainly due to the COVID-19 pandemic, as the shipyard was forced to cease operations for a period of time in 2020 as a result of the circuit breaker measures imposed by the Singapore government in response to the COVID-19 pandemic and the Group’s business activities have reduced after the circuit breaker measures ended on 1 June 2020.

Training We have not presented training for other employment categories as those are cyclical in nature and immaterial (15% of the Group’s workforce). Training provided to non-executives are only to all male non-executives due to the circumstances that all female non-executives holds administrative office roles.

Training hours per employee per year has decreased from 7 hours per employee in 2019 to 5 hours per employee in 2020. This was due to majority of the core training for the workers being completed in 2017 to 2019 and these trained workers are still with the Group. The COVID-19 pandemic has an impact to the reduced training hours in 2020 too.

LABOUR POLICY AND RELATIONSHIP BETWEEN SINGAPORE AND OTHER COUNTRIES AND ITS RELEVANT LAWS AND REGULATIONS A clear understanding of the applicable labour laws and regulations, as well as the labour policy and relationship between Singapore and other countries are required given that our shipyard business relies largely on foreign workers (including skilled workers) from Thailand, Bangladesh, China, India, Malaysia and Myanmar to meet our staffing needs.

Our labour supply and its associated costs are correlated to developments of labour policies of the abovementioned countries as well as the relationship between them and Singapore. In addition to the above, we are also subjected by local employment legislation, in terms of hiring quota, levies and security bonds. Any unfavourable changes to either of the above will definitely affect our operations.

We stay constantly updated to the labour policies between Singapore and other countries, and to the local legislation (largely in particular to the Singapore Budget), so as to react and tweak, at the earliest possible, our employment practices accordingly to minimise and mitigate any unfavourable impact.

5 7

14 16

-

5

10

15

20

2020 2019 2018 2017T R A I N I N G H O U R S ( H R S )

Table 14: Average training hours spend per employee per year for Non-Executive employees (in hours)

Above: On-The-Job training conducts to new employees

ES GROUP (HOLDINGS) LIMITED SUSTAINABILITY REPORT 2020 OUR ECONOMIC SUSTAINABILITY

23

OUR ECONOMIC SUSTAINABILITY

Management Approach The going-concern and profitability of the Company are important for the Stakeholders. Financially sound strategy and operational method for the present and the future determine the profitability and sustainability of the Group. The accurate and transparent presentation of financial information in the financial statements will provide transparency of the performance and position of the Group for Stakeholders.

We regularly review our operation and strategy risks affecting the sustainability of our businesses. The Group is on constant lookout for changes in business trends and opportunities to shift our business directions accordingly. This is accompanied by consultation with professionals, to ensure that the Group’s directions are on the right track.

We also seriously consider and assess any weakness and lapse in controls made known during audits and strive to enhance the internal controls to ensure the effectiveness of our controls, as well as to ensure the true and fair view of the financial statements.

PERFORMANCE IN 2020 Economic value generated by the Group was reported at S$20.6 million in FY2020, decreased from S$28.9 million in FY2019. Total expenditure incurred by the Group, excluding Employee Wages and Benefits was S$13.6 million in FY2020, decreased from S$14.6 million in FY2019. Group net profit was S$0.3 million in FY2020, as compared to S$3.8 million in FY2019.

The decrease of Group net profit was mainly due to decrease in the Group’s revenue and the Group having to continue to incur basic salary costs for its foreign workers despite the closure of the Group’s key customer’s shipyard, which resulted in a temporary halt of the Group’s operations at the shipyard

from April 2020 to June 2020. In FY2019, there were collection and recognition of revenue of S$7.8 million derived from final settlement of variation orders, while the associated cost had been recognised in previous financial years in line with accounting standards. This had led to a higher gross profit and gross profit margin being recorded in FY2019.

Earnings per share (“EPS”) was 0.69 cents in FY2020, down from EPS of 3.30 cents in FY2019.

The Group incurred a cost of capital of S$147,000 in FY2020, decreased from S$328,000 in FY2019. Cost of capital includes interest paid on bank

borrowings and finance leases. The Group declared a cash dividend of 0.25 Singapore cents per ordinary share for FY2020, as compared to the cash dividend of a total of 0.45 Singapore cents per ordinary share (comprising a first and final dividend of 0.15 Singapore cents, as well as a special dividend of 0.30 Singapore cents) for FY2019.

Government Taxes In FY2020, the Group received grants amounting to S$2,654,351 from government, comprise mainly subsidy received under the Jobs Support Scheme and foreign worker levy rebate that provided wage support to

22.67 cents

Net Asset Value per Share

0.69 cents

Basic & Diluted Earnings per Share

17,533

336

Revenue (S$'000)Profit for the year (S$'000)

-

20,000

40,000

60,000

2018 2019 2020

N E T A S S E T S ( S $ ' 0 0 0 )

Assets

Liabilities

Net Assets / SH Equity

43,415 11,143

32,008

F I N A N C I A L P O S I T I O N ( S $ ' 0 0 0 )

Assets

Liabilities

Net Assets /SH Equity

- 10,000 20,000 30,000

R E V E N U E ( S $ ' 0 0 0 )

Singapore

Overseas

Group

-

1,000

2,000

3,000

4,000

5,000

G R O U P P R O F I T F O R T H E Y E A R

( S $ ' 0 0 0 )

19.10 22.42 22.67

0.69 3.30 0.69 -

10.00

20.00

30.00

2018 2019 2020

F I N A N C I A L R A T I O S ( P E R S H A R E , I N

C E N T S )

Net asset value

Basic and dilutedearnings

Financial highlights and trends for FY2020


24

employers during the COVID-19 outbreak in FY2020.

The Group paid tax of approximately S$125,000 in FY2020. Taxes paid are net of any tax rebates granted by the government, where applicable.

Staff Costs In FY2020, staff costs amounted to S$9.5 million for 421 employees, which decreased from S$10.2 million for 490 employees in FY2019, in the form of salary, wages, pension scheme based on respective jurisdictions (mainly Singapore’s Central Provident Fund (“CPF”)), foreign workers’ levy, skill development fund and other staff benefits (including, but not limited to, welfare given to staff and bonuses).

Singapore’s CPF contributions were made in accordance to prevailing Central Provident Fund Act. The total pension paid, which was included in the total staff costs, was S$451,000 in FY2020, decreased from S$467,000 in FY2019.

A detailed account of the full financial performance and position of the Group can be found in the Annual Report 2020.

Economic Value Delivered to the Society In FY2020, the Group generated S$20.6 million of economic value for our Stakeholders, which was distributed to them through our business operations. The Group has generated employment opportunities, business opportunities

to our suppliers, and tax revenues for the governments.

The Group has generated negative S$0.1 economic value in FY2020, mainly due to subsidy received from government to support as a result of the COVID-19 pandemic, was greater than income tax paid for the year.

Reportable Fines and Sanctions There is no reportable significant fine paid to and sanction (including non-monetary form) imposed by laws and regulations in country where our operations exist, international declarations, conventions, and treaties relevant to our operations, and through cases brought against the organisation through the use of dispute mechanisms (both national and international) supervised by government authorities.

Economic Value Generated by the Group S$20.6 millionThis includes revenue generated from the Group's operating activities, and other operating income (excluding government assisted grants).

Economic Value Distributed to Others S$20.7 millionOperating Costs: S$13.6 millionThis refers to purchases and services received from suppliers for the generation of economic value.

Employee Wages and Benefits: S$9.5 million Employee costs, which comprises salaries, wages, pension funds, and other staff benefits provided by the Group.

Capital Providers: S$0.1 million This refers to interest paid on bank borrowings and finance leases, as well as dividends declared (if any).

Government: (S$2.5) million This includes taxes paid, net of any government grants received.

Economic Value Retained by the Group (S$0.1) millionTable 16: Economic value generated and distributed by the Group for FY2020

TRUE AND FAIR VIEW OF THE FINANCIAL STATEMENTS Financial information presented in the Annual Report is a medium of communication to the Stakeholders in informing how the Group is performing. We understand the importance of our Stakeholders and management in making informed decisions based on the Annual Report that presents a true and fair view of the Group’s financial performance and position.

We ensure that the information contained in our Annual Reports are

both adequate and free from misstatement (which can arise from an error, or from a fraudulent activity that remains undiscovered). Efforts made to ensure the true and fair view of the financial statements include: Implementation of procedures; Sending the finance team for

training and updates; Implementation of whistle-blowing

procedures; and Introduction of contractual

provisions to allow the Company to reclaim incentive components linked to the performance of the Company.

Implementation of procedures The Group has implemented procedures manual to govern the Group on how operational procedures should be carried out, and how employees should behave and perform in the interest of the Group.

Training and Updates We periodically send our finance team for training and updates on the relevant reporting standards, such as those required by the Financial Reporting Standards of Singapore, the Code, SGX Catalist Rules, and so on. This is to ensure that the Annual Report is


25

prepared in accordance to the required standards and rules so as to give a true and fair view of the financial position and performance of the Group. The above function is undertaken by the Committee (refer to the section “Our Commitment to Sustainable Operation” of this report for the detailed responsibility of the Committee) to oversee compliance matters of the Annual Report.

Whistle-blowing Whistle-blowing procedures have been implemented to ensure that everyone within the Group acts legally and in the interest of the Stakeholders. All this information is reported as required under the Code and can be found in the Annual Report 2020 page 37. Whistle-blowing policy and whistle-blowing reports received (if any), will be assessed by the Audit and Risk Committee from time to time. Please refer to the section on “Our Commitment to a Sustainable Operation” in this report for further details.

Incentive-linked remuneration The remuneration of the Executive Directors’ and the key Management is linked to the performance of the Company (please refer to the Annual Report 2020 page 29). With effect from 2018, the Company has adopted contractual provisions to safeguard against material misstatement of financial statements to deter and recover from the unlikely event of deliberate manipulation of the performance of the Company. Such contractual provisions allow the Company to reclaim incentive components of the remuneration from the Executive Directors’ and the key Management in the exceptional circumstances of misstatement of financial results or misconduct resulting in financial loss to the Company.

PROJECT AND QUALITY MANAGEMENT

New building and repair segment It is known that ineffective, poor planning and slow execution of a project plan can result in costly

avoidable losses (such as wastages, disputable damages, overrun in project costs, liquidated damage claims and terminations from customers). At such, we have invested heavily on effective project management system to ensure effective and safe project execution with high quality deliverables.

We have testified the above with the attainment of ISO, OHSAS and BizSafe Star certifications since 2009, which is a testament to our effective implementation of the processes across the Group. The certifications require us to be audited on an annual basis, which ensure that the above mention processes stay effective on a continuing basis.

Shipping segment Similarly, we have high confidence on the operational processes in the ship chartering and marine supplies divisions to deliver high quality and timely charter services as well as efficient and timely supply of marine consumables and spare parts.

The ship chartering division constantly monitors the performances and co-ordination between the relevant agents and brokers to ensure that the vessels are competently crewed and well maintained at all times so as to ensure high utilisation with repeated customers at profitable rates, as well as avoid any downtime arising from poor co-ordination and planning which will result in demurrages and loss of charter opportunities.

In the context of marine supplies, the division will ensure that the supply chain is properly managed, by fulfilling pre-requisites that may be imposed by suppliers so as to receive the supplies in good time shortly before fulfilling the promised delivery date to the customers. This mitigate risk arising from poor coordination with vendors, ship owners and ship managers that will result in poor customers’ satisfaction and loss of business opportunities.

DIVERSIFICATION OF TRADES The Group understands the importance of diversification as the marine and

offshore oil and gas industries are cyclical in nature. Any downturn in global or trade specific economic conditions such as the financial crisis in 2008 and 2009, as well as the downturn in marine and offshore oil and gas industries due to the drastic fall in oil prices since 2015, will adversely affect us. There is no assurance that future economic downturns will not occur and hence steps to diversify are constantly being evaluated and implemented.

Furthermore, diversification creates synergy, and allows sharing of technical resources, reduction of operational costs, higher market penetration and expansion of customer and supplier base.

Besides expanding to undertake EPC, we are also constantly looking into possibilities of acquisition or establishment of complementary businesses or joint ventures with sustainable parties as and when opportunities arise.

In 2012, we launched our first bareboat charter vessel after assessing the performance of this segment and noted its potential. In 2016, we officially placed more resources to further develop the shipping segment, with the acquisition of an additional vessel and started spot chartering services in December 2016. In mid-2017, we started the marine supplies division.

In 2020, we completed the acquisition of ProXess Engineering Pte Ltd, which is a part of the Group’s effort to diversify into components sales, supplying valve, actuator and related solutions. Nonetheless, our focus of expanding the shipping segment continued from 2018, where revenue from the shipping segment stood at 30.64% (FY2019: 22.8%, FY2018: 23.7%) of the Group’s revenue in FY2020. The Group has also completed the acquisition of another vessel, ES Jewel, in 2021. With the diversification into the shipping segment, the Group’s revenue contribution concentration on new building and repair of offshore and marine structures and vessels has reduced.


26

MITIGATION OF IMPACT FROM CLIMATE CHANGE The burning of fossil fuels such as oil and gas is likely to change structurally in the coming years, with the Paris Climate Agreement first passed in 12 December 2015 and with the COP24 in Katowice, Poland (also known as the 24th Conference of the Parties to the United Nations Framework Convention on Climate Change (“UNFCCC”)).

The conference continues to press nations to commit even tremendous global climate efforts to slow down global warming to under 2°C, emphasising that current efforts are far from efficient in achieving the goal. The conference also gave birth to a common climate rulebook, known as the Paris Agreement Rulebook (also common referred as the Katowice Rulebook) that aims to regulate on carbon emissions reduction and reporting7.

Carbon emissions are directly correlated to the demand in the marine, offshore, oil and gas, where demand is likely to reduce over time with renewable energy sources sought for. This may drive oil prices downward which may affect us in the following manner:

New building and repair segment Business activities in shipyards are expected to be impacted, and thus our core business will take a hit financially. As the market demand changes in the marine, offshore, oil and gas industries alongside with global trend, we will have to adapt and grow with the new changes. For instance, we have since 2016 shifted our focus from the new building and conversion projects to the repair projects and components sales as we expected the demand for the new building and conversion to weaken over time. On the same note, we have also continued to focus on the expansion in our shipping segment this year.

Shipping segment Our vessels are oil tank bunkers designed for the transportation of marine and gas oil for oil and gas companies. The impact of global warming will result in a change in market condition, either due to a change in the terrain throughout the region or the change in demand for chartering services.

We have taken a prudent approach to determine the size of our fleet and the physical size of our vessels while we expand this segment. We constantly monitor market conditions within Southeast Asia, assess market competition before we decide on the viability of expanding our fleet size and vessel type to satisfy the current market condition.

Please refer to section “Diversification of Trade” in this report for diversification efforts that further mitigate this risk.

Above: Mobilisation of full Remotely Operated Vehicle (ROV) System.

Footnote 7. Kalina Oroschakoff; Paola Tanma, 5 takeaways from the COP24 global climate summit (politico.eu 16 December 2018). Retrieved from https://www.politico.eu/article/5-takeaways-

from-the-cop24-global-climate-change-summit-poland-katowice/ on 30 April 2021.

ES GROUP (HOLDINGS) LIMITED SUSTAINABILITY REPORT 2020 OUR SUPPLY CHAIN

27

OUR SUPPLY CHAIN In a glance What was said in 2019 (target for 2020) What happened in 2020 What we plan to do next (target for

2021) Continue to evaluate the impact at

each point of supply chain in relation to sustainability and report on them.

Impact at each point of supply chain in relation to sustainability is evaluated and reported.

Continue to evaluate the impact at each point of supply chain in relation to sustainability and report on them.

Management Approach The effectiveness of our sustainability efforts can only be optimised with the proper management of each major point of our supply chain, which ranges from the beginning of the supply chain (i.e. suppliers and subcontractors) to the final end user (charterers, contractors and end-user). Their sustainable efforts affect the performance of ours indirectly.

The boundary of this topic can be wide, extending to a customer or supplier that we might not have direct contact, but may affect our sustainability efforts. We will however restrict our boundary to only active efforts that are applicable to our immediate suppliers, subcontractors, charterer, contractors, or end-user due to the practicality constraint.

SUPPLY CHAIN MANAGEMENT New building and repair segment In our core business, we primarily contract with and supply skilled labour and services to a shipyard (i.e. the contractor), acting as a resident subcontractor. The contractor is primarily responsible with the procurement of the required equipment and materials for the building, conversion and repairs work on the vessels. The contractor imposes regulations to regulate us, such as on areas of safety, material handling, and so on. We are responsible for the procurement of safety equipment, components and small equipment in the course of the supply of skilled labour and services. The completed job is first handed over to our contractor who will in turn handover the vessel once it is completed and ready for voyage.

Shipping segment The shipping segment comprises of ship chartering, and the trading of marine supplies to vessels. The execution of a

complete ship charter starts by charterer engaging us to transport liquid oil from a predetermined departure port to a Southeast Asia destination as determined by the charter agreement. We then engage port agents (both local and the Southeast Asia region), commercial managers, ship managers, and suppliers supplying marine gas oil and other marine supplies for the operation of our vessels.

As required by the Marine and Port Authority of Singapore (“MPA”) and in line with International Maritime Organisation (“IMO”), we will periodically conduct surveys on the vessels to ensure that it is optimal for voyages. We engage professional surveyors, equipment manufacturers, and subcontractors to survey, supply equipment, and service the vessels.

In our marine supplies division, we engage suppliers and subcontractors for the bespoke fabrication of vessel’s components as well as the trading of consumables and other liquid goods on board vessels that are required by the customer. Goods, components and services are acquired from suppliers, and the requested goods are subsequently delivered to the customers.

Management We have finalised our first Supplier Code of Conduct and circulated it to all our suppliers on 21 November 2019. This Supplier Code of Conduct is expected to be abided by all suppliers and subcontractors to ensure the sustainability of their operations in all areas of economic, environment, social and governance, which comprises of topic on business conduct, labour practices, health and safety, and environmental management. We believe that this will positively value-add to our sustainability effort throughout our

supply chain and even benefit our suppliers themselves.

New suppliers are assessed for any bad reputation and records, together with any presence of applicable certifications and licenses. These are credentials towards key sustainability factors relevant to us. Continuing assessments, such as mandated reporting, inspection visits or enquiry of information, shall be made accordingly to ensure acceptable standards of safety and health, quality, and environment are maintained. We will make the necessary changes upon observation of unsatisfactory standard.

As for customers, we aim to ensure that the provision of the sales or services are not directly associated to matters on breach of safety, financial and environmental misconducts, or any other unethical practices.

For those parties who are other than our immediate suppliers, subcontractors, charterer, contractors, or end-user, we will make effort to disassociate in the event that it is made known to us through credible sources (such as professional consultants, public news, and etc.) that there is breach of safety, financial and environmental recognised standards, or any other unethical practices.

The Group is committed to make continuous efforts to work closely with parties in our supply chain to ensure best practices and alignment of policies. We are committed to cooperate with all parties for effective and safe operation.

Commitment We practice fair competition in compliance of applicable competition laws and regulations in our businesses. In 2020, there are no legal actions taken against the Group for anti-competitive behaviour, anti-trust, and monopoly practices.

ES GROUP (HOLDINGS) LIMITED SUSTAINABILITY REPORT 2020 OUR ENVIRONMENTAL PERFORMANCE

28

OUR ENVIRONMENTAL PERFORMANCE

Management approach Environmental effort is an increasing hot topic around the world, and Singapore has committed on environmental effort with the signing of Paris Agreement on 22 April 2016 followed by the ratification on 21 September 2016. On 31 March 2020, Singapore submitted its enhanced Nationally Determined Contribution (NDC) and Long-Term Low-Emissions Development Strategy (LEDS) documents to United Nations Framework Convention on Climate Change (UNFCC), to update Singapore’s climate pledge submitted earlier under the Paris Agreement. The Group is committed to participate in the effort of being “green” to be aligned with the nation and global effort.

The inaugural Sustainability Report published in November 2018 for the reporting year of 2017 has initiated our attention to environmental issues in relation to our sustainability. We had then identified the existing efforts we have made as well as the relating Sustainability Factors that we can work on as part of our effort and commitment. We have implemented controls since 2018 to record data on energy consumption and the associated emissions.

The boundary of this topic is restricted to the operations in Singapore due to the insignificance of the overseas operations (as illustrated in “Our Sustainability Topics” in this report). We have extended the boundary to include energy consumption and emissions from vessels in this report. We have chosen

not to extend our boundary to the consumption made indirectly in our core business’ contractor’s shipyard due to the limited access to and availability of that information. We will only be able to report the consumption directly from the service provider or supplier where consumption information is readily available. We apply the Precautionary Principle (as described in The Rio Declaration on Environment and Development (1992) Principle 15) via the applicable legislation and regulations in our business to stay in compliance to the abovementioned legislation and regulations, where efforts are detailed below.

ENERGY CONSUMPTION We started tracking our energy consumption data for the Group in 2018, but this was only for the direct consumption of energy purchased from service providers.

In 2020, the Group consumed a total of 15,897,329 kWh of energy in the form of low sulphur marine gas oil, electricity, gas and fuel purchased from suppliers / service providers, increased from 14,223,277 kWh in 2019. Out of which 49,851 kWh (2019: 43,699 kWh) related to energy used in dormitories and were subsequently reimbursed to the Group from workers staying in the dormitory. 100% of the energy consumed is non-renewable.

EMISSIONSThe Group reported a total emission9 of 4,432 metric tonnes (“MT”) of carbon

dioxide (“CO2”) in 2020, increased by 791 MT from 2019. After deducting emission related to the consumption subsequently reimbursed to the Group from workers staying in the dormitory of 21 MT (2019: 18 MT), of which all are Scope 2 Emissions, the Group would have reported a net emission of 4,412 MT in 2020 (2019: 3,624 MT). Total emission figure comprises of Scope 1 Emissions10 of 4,308 MT and Scope 2 Emissions11 of 125 MT. The composition of emissions only includes CO2. For 2020, we have included the emissions from our vessels, but the analysis is still confined within Singapore’s operations.

Scope 1 Emissions comprises direct emissions of fossil fuel consumed directly by the Group’s vessels and vehicles. Scope 2 Emissions comprises electricity and gas consumed by the Group. The resources reported here is the same as those reported in Energy Consumption Sustainability Factor.

In a glance What was said in 2019 (target for 2020)


Establish an energy intensity indicator that reflects our energy consumption activities

Expand topic boundary to include vessels

Target to establish an energy intensity indicator has been aborted as similar information can be obtained from Tables 17 and 18

Expanded topic boundary to include energy consumption and emissions from vessels

Continue to factor in environmental considerations in our business

Continue to identify process improvements and implement measures to enhance energy efficiency and reduce emissions

Above: Non-destructive testing conducts on fabricated pipe joints


29

474,206 26,077

15,125,862

271,184 724,953 22,596

13,228,758

246,970

4,308

125

3,529

113

Table 17: Energy consumption (kWh) in Singapore by type for 2020

⛽⚡ � ⚡

⛽�

Table 18: Energy consumption (kWh) in Singapore by type for 2019

⚡ : Electricity purchased from electricity provider. �: Gas purchased from gas provider. ⛽: Petrol and diesel purchased from suppliers for the direct use on vehicles in the Group7. �: Low Sulphur marine gas oil purchase from supplier8.

SCOPE 1

SCOPE 2

Table 19: Emissions in terms of CO2 equivalent (MT) for 2020

SCOPE 2

SCOPE 1

Table 20: Emissions in terms of CO2 equivalent (MT) for 2019

Footnotes 8. Petrol, diesel and low sulphur marine gas oil energy are converted to kWh from litre consumed using a conversion factor of

approximately 10.55, 9.32 and 10.64 respectively. Conversion factors are obtained from U.S. Energy Information Administration (“EIA”).

9. Emissions data are computed using the calculators from Greenhouse Gas Protocol website. We have applied financial control approach, as defined in GHG Protocol “A Corporate Accounting and Reporting Standard”.

10. Scope 1 Emissions refers to direct GHG emissions occur from sources that are owned or controlled by the Group, expressed in CO2

equivalent in MT, as defined in GHG Protocol “A Corporate Accounting and Reporting Standard”. Figures excludes emissions from combustion of biomass, which the Group does not have.

11. Scope 2 Emissions refers to GHG from the generation of purchased electricity consumed by the Group as defined in GHG Protocol “A Corporate Accounting and Reporting Standard”.

��


30

WATER COMSUMPTION The Group reported a total water consumption of 31,798 cubic metres (“m3”) in 2020, as compared to 16,658m3 in 2019. The significant increase was due to water consumption being overcharged in year 2018. The Group subsequently receive a refund for the overpayment, in August 2019. The water consumed is 100% from municipal water supplies.

EFFLUENTS AND WASTE

New building and repair segment The core business involves heavy usage of materials. However, as a resident subcontractor based in our contractor’s shipyard, we are bounded by the regulations imposed by the shipyard on how materials are used and disposed. The onus is on us to abide to the regulations set out by the contractor. All materials for the purpose of new building and repair works, are issued by the shipyard. Excess materials unutilised are returned to the shipyard for reuse. Any minor remnants of material are disposed in locations designated by the shipyard, and subsequently collected by waste collector. This ensure that wastage contributed by our workers are minimised and properly handled.

On the part of the Group’s effort, we educate our employees on the importance of efficient usage to reduce material wastage. Trainings are provided to improve the skillset of the workers, which will also translate to lesser wastage arising from inefficient use of materials. The materials purchased directly by us are safety equipment and small materials and they are disposed according to the shipyard regulation.

Shipping segment Our vessels are registered under MPA’s Ship Registry of Ships (“SRS”), and the pre-requisites relating to the vessels are fulfilled through the classification awarded by Bureau Veritas and Nippon Kaiji Kyokai, which covers the compliance to various key convention and regulations set by the IMO and the International Labour Organization

(“ILO”). Included in the classification is the various certifications covering key environmental conventions as seen in Table 21.

The certifications are credentials of efforts taken to ensure that the structure, equipment systems, fittings and material used for the vessels fully comply with the requirements to prevent environmental pollution, be it through improper, unintentional, and/or accidental discharge of oil, spill of oil, disposal of garbage waste, and discharge of ozone depleting substances.

OUR EFFORTS We continue to commit in reducing the use of carbon-emitting transportation to transport our workers. We are still using dormitory that houses workers within walkable distance to the shipyard. Out of the total workforce of 421, 179 and 33 workers are currently staying in the shipyard and near (i.e. walking distance) the shipyard respectively.

To further reduce the indirect emission of GHG via the use of public transport, we have and are still providing each worker with a bicycle. This is in line with the nation’s effort of a “Car-lite” city. For other workers staying at our own dormitory which is located outside the

shipyard, we transport them to the shipyard using commercial buses and we ensure that the buses are fully occupied to maximise efficiency of each bus-trip.

Our Group has also switched from using heavy marine fuel oil to low sulphur fuel oil since November 2019 for our vessel, ES Aspire. This is in compliance with IMO 2020, and is also part of our Group’s effort to move towards a lower emission future.

OTHER COMPLIANCE MATTERS The Group has no operations that are on or near any habitat that are protected or have high biodiversity value as identified by international bodies such as the International Union for Conservation of Nature (“IUCN”).

As of the reporting date of the Annual Report 2020, the Group has not been penalised for any non-compliance of environmental laws and regulations imposed by Singapore and will continue to work with the relevant authorities to stay updated so as to continue to comply with the laws and regulations.

Our Certificates covering the Key Environmental Conventions

International Oil Pollution Prevention Certificate for International Convention for the Prevention of Pollution from Ships, 1973 (“MARPOL 1973”) Annex I

International Air Pollution Prevention Certificate for MARPOL 1973 Annex VI

International Sewage Pollution Prevention Certificate for MARPOL 1973 Annex IV

International Anti-Fouling System Certificate for International Convention on the Control of Harmful Anti-Fouling Systems on Ships, 2001 (“AFS 2001”)

International Ballast Water Management Certificate for International Convention for the Control and Management of Ships’ Ballast Water and Sediments, 2004 (“BWM 2004”)

Table 21: Certificates covering the IMO’s Key Environmental Conventions

ES GROUP (HOLDINGS) LIMITED SUSTAINABILITY REPORT 2020 OUR REPORTING BASIS

31

OUR REPORTING BASIS This report is published annually and covers the same period as the financial year of the Company (January to December 2020). There are no changes to the Sustainability Topics and no material changes to their boundaries from last year report. There is no restatement made in this report too.

In addition, there is no reportable significant change to the organisation and its supply chain.

The report uses the Global Reporting Initiative (“GRI”) Sustainability Reporting Standards (“GRI Standards”) and Practice Note 7F on Sustainability Reporting Guide of the SGX Catalist Rules. We have chosen to adopt the GRI Standards for the following reasons:

GRI Standards has a long-standing history since 1977 and has been adopted by major organisations across the globe.

GRI Standards are provided in clear structural format, which allow easier conformity and comparability by Stakeholders across years or across different companies.

We have built on the framework laid out in our inaugural report dated 9th

November 2018. Please refer to the GRI Content Index below for the respective disclosure page references, as well as the specific standard’s edition used for each GRI Disclosure.

This report has been prepared in accordance with the GRI Standards: Core Option.

We have not sought any independent party’s assurance for this report.

As a continuous effort to improve the quality and relevance of the sustainability information addressed to our Stakeholders, we welcome feedback from all Stakeholders on how we can better address our sustainability information by writing to us via email at [email protected] or via mail at 8 Ubi Road 2 #06-26 Zervex, Singapore 408538.

GRI CONTENT INDEX This report has been prepared in accordance with the GRI Standards: Core Option.

DISCLOSURES REFERENCE / REASON FOR OMISSION

GRI 101: Foundations 2016GRI 102: General Disclosures 2016

Organisation Profile102-1 Name of the organisation Page 3 102-2 Activities, brands, products, and services Page 3102-3 Location of headquarters Page 3102-4 Location of operations Page 3102-5 Ownership and legal form Page 3

Annual Report 2020 Pages 133 to 134102-6 Markets served Page 3102-7 Scale of the organization Pages 3, 18 to 20 and 23 to 24102-8 Information on employees and other workers Pages 17 to 22102-9 Supply chain Page 27102-10 Significant changes to the organization and its supply chain Page 31102-11 Precautionary Principle or approach Page 28102-12 External initiatives Page 31102-13 Membership of associations Singapore Chinese Chamber of Commerce

& Industry; Association of Singapore Marine Industries

Strategy102-14 Statement from senior decision-maker Page 2102-15 Key impacts, risks, and opportunities Pages 11 to 12

Ethics and Integrity102-16 Values, principles, standards, and norms of behaviour Pages 9 to 10102-17 Mechanisms for advice and concerns about ethics Pages 9 to 10

Governance102-18 Governance structure Page 9

Stakeholder Engagement102-40 List of stakeholder groups Page 8102-41 Collective bargaining agreements Page 17

ES GROUP (HOLDINGS) LIMITED SUSTAINABILITY REPORT 2020 GRI CONTENT INDEX

32

DISCLOSURES REFERENCE / REASON FOR OMISSION 102-42 Identifying and selecting stakeholders Page 8102-43 Approach to stakeholder engagement Page 8102-44 Key topics and concerns raised Pages 8 and 11 to 12

Reporting Practice102-45 Entities included in the consolidated financial statements Annual Report 2020 Pages 95 to 97 102-46 Defining report content and topic boundaries Page 11102-47 List of material topics Page 12102-48 Restatements of information Page 31102-49 Changes in reporting Pages 11 and 31102-50 Reporting period Page 31102-51 Date of most recent report Page 31102-52 Reporting cycle Page 31102-53 Contact point for questions regarding the report Page before Content Page and Page 31102-54 Claims of reporting in accordance with the GRI Standards Page 31102-55 GRI content index Pages 31 to 33102-56 External assurance Page 31

Our Safety and Health

GRI 103: Management Approach 2016103-1 Explanation of the material topic and its Boundary Page 13103-2 The management approach and its components Page 13103-3 Evaluation of the management approach Page 13

GRI 403: Occupational Health and Safety 2016403-2 Types of injury and rates of injury, occupational diseases, lost days, and

absenteeism, and number of work-related fatalities Pages 13 to 15

Our Labour PracticesGRI 103: Management Approach 2016

103-1 Explanation of the material topic and its Boundary Page 17103-2 The management approach and its components Page 17103-3 Evaluation of the management approach Page 17

GRI 202: Market Presence 2016202-2 Proportion of senior management hired from the local community Page 18

GRI 401: Employment 2016401-1 New employee hires and employee turnover Page 22401-3 Parental leave Page 17

GRI 402: Labour/Management Relations 2016402-1 Minimum notice periods regarding operational changes Page 17

GRI 404: Training and Education 2016404-1 Average hours of training per year per employee Page 22404-3 Percentage of employees receiving regular performance and career

development reviews Page 22

GRI 405: Diversity and Equal Opportunity 2016405-1 Diversity of governance bodies and employees Pages 17 to 20

GRI 407: Freedom of Association and Collective Bargaining 2016407-1 Operations and suppliers in which the right to freedom of association and

collective bargaining may be at risk Pages 17 and 27

GRI 408: Child Labour 2016408-1 Operations and suppliers at significant risk for incidents of child labour Pages 17 and 27

ES GROUP (HOLDINGS) LIMITED SUSTAINABILITY REPORT 2020 GRI CONTENT INDEX

33

DISCLOSURES REFERENCE / REASON FOR OMISSION

GRI 409: Forced or Compulsory Labour 2016409-1 Operations and suppliers at significant risk for incidents of forced or

compulsory labour Pages 17 and 27

GRI 412: Human Rights Assessment 2016412-1 Operations that have been subject to human rights reviews or impact

assessments Page 17

Our Economic SustainabilityGRI 103: Management Approach 2016


GRI 201: Economic Performance 2016201-1 Direct economic value generated and distributed Pages 23 to 24201-2 Financial implications and other risks and opportunities due to climate

change Pages 25 to 26

201-3 Defined benefit plan obligations and other retirement plans Page 23201-4 Financial assistance received from government Page 23

GRI 419: Socioeconomic Compliance419-1 Non-compliance with laws and regulations in the social and economic

area Page 23

Our Supply ChainGRI 103: Management Approach 2016


GRI 206: Anti-competitive Behaviour 2016206-1 Legal actions for anti-competitive behaviour, anti-trust, and monopoly

practices Page 27

Our Environmental PerformanceGRI 103: Management Approach 2016


GRI 302: Energy 2016302-1 Energy consumption within the organization Pages 28 to 29

GRI 303: Water 2016303-1 Water withdrawal by source Page 30

GRI 304: Biodiversity 2016304-1 Operational sites owned, leased, managed in, or adjacent to, protected

areas and areas of high biodiversity value outside protected areas Page 30

GRI 305: Emissions 2016305-1 Direct (Scope 1) GHG emissions Pages 28 to 29305-2 Energy indirect (Scope 2) GHG emissions Pages 28 to 29

GRI 306: Effluents and Waste 2016306-3 Significant spills Page 30

GRI 307: Environmental Compliance 2016307-1 Non-compliance with environmental laws and regulations Page 30

Our Corporate GovernanceGRI 103: Management Approach 2016

103-1 Explanation of the material topic and its Boundary Pages 9 to 10103-2 The management approach and its components Pages 9 to 10103-3 Evaluation of the management approach Pages 9 to 10

GRI 205: Anti-corruption 2016205-3 Confirmed incidents of corruption and actions taken Page 9


Company Registration No.: 200410497Z 8 Ubi Road 2 #06-26 Zervex Singapore 408538

Tel: +65 6748 9111 Fax: +65 6284 3005 www.esgroup.com.sg

7 voyaging into sustainability

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